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James Hyerczyk

The Euro is trading lower against the U.S. Dollar on Tuesday after the release of a report that showed Euro Zone inflation held steady as expected last month, taking a break in what is likely to be a temporary but sharp spike in consumer prices in the coming months.

Perhaps helping to put a lid on the Euro is chatter saying instead of tightening on higher inflation, the ECB may actually ease further, possibly as soon as its March 11 meeting, to counter a recent rise in nominal yields, which threatens to choke off growth by making borrowing more expensive.

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At 13:36 GMT, the EUR/USD is trading 1.2027, down 0.0022 or -0.18%.

“Headline inflation will almost certainly rise further in the coming months, to around 2% due to further rises in food and energy price inflation,” ABN Amro said in a note before the data release. “However, it will be very likely to a one off…leading to a sharp drop in inflation as the disinflationary pressures from the economic shock come to the fore.”


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 1.2243 will signal a resumption of the uptrend. The main trend will change to down on a trade through 1.1952.

The minor trend is down. This is driving the momentum lower.

The EUR/USD is currently trading inside the main retracement zone at 1.2074 to 1.2010. This zone is controlling the near-term direction of the Forex pair.

The short-term range is 1.2349 to 1.1952. Its retracement zone at 1.2151 to 1.2197 is resistance, and a potential trigger point for an acceleration to the upside.


Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Tuesday is likely to be determined by trader reaction to 1.2010.

Bullish Scenario

A sustained move over 1.2010 will indicate the presence of buyers. This could trigger a rally into 1.2074. This is a potential trigger point for an acceleration to the upside with 1.2151 the next likely upside target.

Bearish Scenario

A sustained move under 1.2010 will signal the presence of sellers. This could trigger an acceleration to the downside with 1.1952 the next likely downside target.

For a look at all of today’s economic events, check out our economic calendar.

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